Articles on Credit Cards: A Comprehensive Guide

Understanding credit cards can be overwhelming, but it doesn't have to be. Credit cards can be a convenient way to make purchases, pay bills, and even earn rewards.

The average credit card holder has multiple credit cards, with 44% of millennials having three or more credit cards. This can make it challenging to keep track of due dates, interest rates, and rewards programs.

To make the most of your credit cards, it's essential to understand the terms and conditions, including interest rates, fees, and credit limits. A credit limit of $1,000 or less is considered a good starting point for beginners.

Credit cards typically charge a higher annual percentage rate (APR) compared to other forms of consumer loans.

Interest charges on any unpaid balances charged to the card are usually imposed about a month after a purchase is made, unless there's a 0% APR introductory offer in place.

By law, credit card issuers must offer a grace period of at least 21 days before interest on purchases can begin to accrue.

Paying off balances before the grace period expires is a good practice when possible, as it can help avoid interest charges.

Some credit cards accrue interest daily, which can result in higher interest charges for as long as the balance is not paid.

Mistakenly switching from a monthly accrual card to a daily one may nullify savings from a lower interest rate if you're planning to transfer your credit card balance to a card with a lower interest rate.

Most major credit cards, such as Visa, Mastercard, Discover, and American Express, are issued by banks, credit unions, or other financial institutions.

Many credit cards offer incentives like airline miles, hotel room rentals, gift certificates to major retailers, and cash back on purchases, making them rewards credit cards.

Store credit cards, like those issued by national retailers, are typically easier to qualify for than major credit cards, but can only be used to make purchases from the issuing retailers.

Secured credit cards require a deposit to get and use the card, offering limited lines of credit equal to the security deposit, which is often refunded after responsible card usage.

Prepaid debit cards have available funds that match the money deposited in a linked bank account, similar to secured credit cards.

Unsecured credit cards don't require security deposits or collateral, offering higher lines of credit and lower interest rates than secured cards.

Some credit cards come with no annual fee, while others charge a yearly fee for access and use, often offering rewards and perks in exchange.

Credit card fees and charges can add up quickly. The annual fee on a credit card can range from $50 to $700, depending on the card and its benefits.

These fees are charged by the card issuer to extend credit to you. Some cards don't charge an annual fee, but others do to cover the costs of rewards or incentives like cash back.

Merchant processing fees, also known as swipe fees, are another type of credit card fee. They can amount to 2% to 4% of the purchase price, but can vary by merchant and type of card. Businesses pay these fees to credit card brands like Visa or American Express to process consumer payments.

An annual fee is essentially a fee charged by the card issuer to extend the credit card to you.

Some credit cards don't charge an annual fee, but others can charge fees ranging from $50 to $700, often on cards that offer rewards or incentives like cash back.

Cards with annual fees usually offer benefits that offset the cost, such as cash back, travel rewards, or exclusive perks.

The annual fee can be a significant charge, so it's essential to weigh the benefits against the cost before applying for a card with an annual fee.

Swipe fees have a significant impact on businesses and consumers alike. Merchant processing fees added up to more than $160 billion in 2022.

These costs represent what businesses pay to credit card brands in order to process consumer payments when they pay by card. Swipe fees typically amount to 2% to 4% of the purchase price.

Businesses have a convenient way to collect payments, which can also lead to additional sales since customers have time to pay off their bills rather than needing cash in hand.

The average credit card debt per borrower is a staggering $6,360, which is 10% higher than the year before.

In 2022, credit cards were used to make 31% of all payments, with this number increasing to 37% for households earning $100,000 to $149,999 and 50% for those earning over $150,000.

A whopping 82% of U.S. adults had a credit card in 2022, with about 73% of Americans having a credit card by age 25.

On average, people have three different credit card accounts, with roughly 191 million American adults having at least one credit card account.

The average credit card debt per borrower in the US is a staggering $6,360, with a total of $1.13 trillion in credit card debt.

At the end of 2023, credit card delinquency hit 3.1%, the highest rate since 2011.

About 48% of all credit card users carried a balance at least once in 2022, according to Federal Reserve data.

The number of credit cards varies by generation, with Gen Z members having only 2.1 credit cards as of 2022, while Baby Boomers had 4.6.

On average, people have three different credit card accounts, with 191 million American adults having at least one credit card account.

The average credit score is 718, considered a "good" rating based on the FICO scoring model.

In 2022, credit cards were used to make 31% of all payments, the highest level since 2016.

About 82% of U.S. adults had a credit card in 2022, making credit cards the most common first credit experience for young adults.

By mid-2023, credit card users reached a total of 167.2 million, with nearly half the population opening at least one new account over the past year.

The average credit card interest rate is a staggering 27.89%, according to Forbes Advisor's credit card rate report as of mid-March 2024.

Carrying a balance on your credit card can lead to a significant burden on your budget, especially with interest rates this high.

In November 2023, the average credit card interest rate in the U.S. on accounts with balances where interest was assessed was 21.47%, a figure tracked by the Federal Reserve.

Working towards a zero balance is essential to avoid interest charges, and several credit card payoff strategies can help you achieve this goal.

Credit card debt is on the rise, with the average credit card debt per borrower reaching an all-time high of $6,360 in 2023, or about 10% higher than the year before.

Carrying a credit card balance is common, with 48% of all credit card users doing so at least once in 2022. However, a significant number of cardholders, 22%, are unsure if they can pay their next credit card bill in full.

The consequences of delinquency are serious, with credit card delinquency rates hitting 3.1% by the end of 2023, the highest rate since 2011.

Americans between 45 and 54 years old are most likely to have credit card debt, with 57% of this age group carrying debt.

The 55 to 64 age group ranks highest for average credit card debt, with a median debt of $7,720.

Those aged 75 or older are the least likely to have credit card debt, with only 29.8% of this age group carrying debt.

The 55 to 64 age group also ranks highest for median credit card debt, with a median debt of $3,500.

People in the 65 to 74 age group also have significant credit card debt, with a median debt of $3,500.

US Payment Delinquency Rates have been on the rise, and it's a trend we should all be aware of. The credit card delinquency rate hit 3.1% by the end of 2023, the highest it's been since 2011.

Carrying a credit card balance can sometimes be unavoidable, but making the minimum payment on time each month is crucial to avoid a negative mark on your credit report. This is especially important if you're struggling to pay off your balance.

According to the Federal Reserve Board, 48% of all credit card users carried a balance at least once in 2022. This suggests that many people are struggling to pay off their credit card debt.

The good news is that making the minimum payment on time each month can help prevent further financial stress. By doing so, you'll avoid additional fees and penalties that can add up quickly.

However, it's worth noting that credit card delinquency rates have been steadily increasing over the past year and a half. This is a concerning trend that we should all take seriously.

If you're struggling to pay off your credit card debt, it's essential to communicate with your credit card issuer and explore options for assistance. This may include negotiating a payment plan or seeking the help of a credit counselor.

The number of credit card charge-offs has also risen, hitting a 12-year high at 4.24% by the end of 2023. This is a clear indication that more people are struggling to pay off their credit card debt.

If your credit card is lost or stolen, your losses are limited to $50 as long as you notify your issuer promptly. You may not be responsible for any charges if you report your loss before your credit card is used.

Your issuer must provide a 45-day advance notice of any interest rate increase, fee increase, or any other significant changes in account terms. This gives you time to review and adjust your spending habits accordingly.

Debt collectors may not use abusive, unfair, or deceptive practices to collect money from you if you fall behind on your credit card payments. They must follow the law and treat you fairly.

Here's a summary of your rights:

Consumer Protections are in place to safeguard your financial well-being. You're protected from excessive charges if your card is lost or stolen, with a $50 limit as long as you notify your issuer promptly.

Your issuer must give you a 45-day advance notice before making any significant changes to your account terms, such as interest rate increases or fee hikes. This gives you time to adjust your spending habits or shop around for a better deal.

You have the right to control your credit limit, and your issuer can't charge you a penalty fee for exceeding it unless you explicitly agree to it. This means you won't be surprised by unexpected fees.

Your issuer must clearly disclose the cost of credit, including the annual percentage rate (APR) and the total amount you'll pay. This helps you make informed decisions about your spending.

If you fall behind on payments, debt collectors can't use abusive or deceptive practices to collect money from you. They must treat you fairly and respect your rights.

Here are some key consumer protections at a glance:

Once a year, you can request a free copy of your credit report from each agency to ensure it's accurate. This helps you monitor your credit history and detect any errors.

Billing errors can have serious consequences for consumers, and it's essential to understand who is liable in such cases.

The Fair Credit Billing Act (FCBA) requires creditors to investigate billing errors within 30 days of receiving a written dispute from a consumer.

Consumers have the right to dispute billing errors, and creditors must provide a written explanation of their findings.

According to the FCBA, creditors must correct any errors and send a revised bill to the consumer within 1-2 billing cycles.

If a creditor fails to correct an error, the consumer is not liable for the disputed amount.

The FCBA also limits consumer liability to $50 for unauthorized transactions.

Comparing credit cards can be a daunting task, but it's essential to find the best one for you. Federal law requires creditors to disclose important rate and fee information, making it easier to compare cards.

The Annual Percentage Rate (APR) is a crucial factor to consider. It represents the annual cost of the credit card, including interest and fees. A higher APR means a more expensive cost of using the card to finance purchases.

Some credit cards offer introductory rates, which are special low interest rates that will increase once the promotional period ends. This can be a great option if you need to finance a large purchase.

Fees can add up quickly, including annual fees, balance transfer fees, cash advance fees, foreign transaction fees, and penalties for late payments or returned payments. Be sure to determine if these fees will change over time.

Rewards programs can be complicated, with specific eligibility rules. Know what you need to do to qualify for rewards, which might include meeting spending requirements, and how much you would have to spend to accumulate enough points or miles to get what you want.

To help you compare credit cards, here's a breakdown of the key factors to consider: